Declining Markets Await Bernanke's Speech
Stock futures were sharply lower Monday morning as worries that the Federal Reserve may raise interest rates sooner than some expected. This has put pressure on commodities and precious metals overnight.
At 5:50 a.m. in New York, the Dow Jones Industrial Average futures were down 110 points, or 1.06%, to 10,364 while the S&P 500 futures were lower by 2.1 points to 1,106.00 and the Nasdaq 100 futures were lower by 9.25 points to 1785.75.
Gold's rally evaporated late last week after a surprising report from the U.S. Labor Department showed that the nation's economy only lost 11,000 jobs in November, far better than what economists had expected.
The report was so strong that parts of Wall Street were now betting that the Fed might raise rates next year in response to an improving economy. Fed Fund futures, which are securities that bet on which way the Fed may move interest rates, are now predicting a 20% chance of a 0.5% interest rate in the first quarter of 2010, double from a week ago.
Because of the Fed rate hike speculation, a speech today by Federal Reserve Chairman Ben Bernanke's at the Economic Club of Washington at 12 p.m. ET may be an influence on the market. It will be his first public statement since Friday's jobs report.
The commodities markets were taking the brunt of the pain. After falling more than 4% on Friday, gold was down an additional 2.1% to $1,145.10 a troy ounce. Oil futures slid more than 0.5% to $75.07 a barrel.
Gold and metal stocks like Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and AngloGold (NYSE:AU) were all lower in the pre-market session.
